Adviser should do his best or drop client

A reader who is an investment adviser from California writes that he has discovered that a client sometimes executes the ideas he gives to him through others - a "brother, friend or whatever."

A reader who is an investment adviser from California writes that he has discovered that a client sometimes executes the ideas he gives to him through others - a "brother, friend or whatever."

The adviser recognizes that the situation is unlikely to change.

"So I'm being used for my ideas and given a few crumbs to keep me happy," he writes.

"Should I continue to give them my best ideas?" he asks.

He wants to know the right thing to do about "this conundrum."

"Financial advising isn't a charitable service in these cases," he writes, "so do I have a moral or ethical obligation to do my best work for a client who then places the business that these ideas generate with others?"

The reader is asking several questions. Other financial advisers or planners are fee-based, so they charge by the hour or the plan. But, because the reader's compensation is based on a percentage of money invested or managed, he makes money only if a client invests through him. The reader has no obligation to do business or spend his time giving advice to a non-client if he doesn't want to.

But once he decides to do business with a client, then the right thing is indeed to do the best work he can. It might infuriate him that these clients invest only a small percentage of their portfolio through him, but the reader would be on firmer ground severing business ties with a client rather than doing less than his best work.

Doing his best work includes making intelligent referrals to other professionals, such as lawyers. Holding back on such referrals because of a perceived slight is at best unprofessional.

The right thing is either to take on a client and do your best work, regardless of the size of his portfolio, or to pass on doing business with him.

Jeffrey L. Seglin, a lecturer in public policy, directs the communication program at the Harvard Kennedy School in Cambridge, Mass.